Must read article on need to invest in rail

Originally posted 2009-01-14 14:07:45 -0500. Promoted by carol

One of the most troublesome aspects of Obama’s stimulus plan is the lack of attention to rail transport. Just look at this graph to see why.

Rail vs other modes efficiency

So, I consider this article by Phillip Longman on U.S. freight railroads one of the most important articles of the new year, because it clearly points to the one of the most effective means for moving the economy off the basis of creating financial paper to import oil. There are enough references by Longman to other studies, going back to a 1970s National Academy of Science project that identified the specific lines most suitable to electrification (electrified railroads, which are common in Europe, are twenty times more fuel efficient than trucks), to keep someone interested linking and reading for a full day or two.

I urge you to go and read the entire article. It is extraordinarily well researched and well written. Here’s a teaser:

In a study recently presented to the National Academy of Engineering, the Millennium Institute, a nonprofit known for its expertise in energy and environmental modeling, calculated the likely benefits of an expenditure of $250 billion to $500 billion on improved rail infrastructure. It found that such an investment would get 85 percent of all long-haul trucks off the nation’s highways by 2030, while also delivering ample capacity for high-speed passenger rail. If high-traffic rail lines were also electrified and powered in part by renewable energy sources, that investment would reduce the nation’s greenhouse gas emission by 38 percent and oil consumption by 22 percent. By moderating the growing cost of logistics, it would also leave the nation’s economy 13 percent larger by 2030 than it would otherwise be.

The “bang for buck” return of investment in rail is truly spectacular. For example, rail actually can move priority and perishable freight from New York to Chicago faster than aircraft. But, as Longman explains, because the rail system was built in the mid-1800s (actually, just before the Civil War, when Chicago marked the end of major settlement and the beginning of the frontier), the 1,200 trains a day that move through Chicago do not have a straight connection through.

Consequently, thousands of containers on their way elsewhere must be unloaded each day, "rubber-wheeled" across the city’s crowded streets by truck, and reloaded onto other trains. It takes forty-eight hours for a container to travel five miles across Chicago, longer than it does to get there from New York. This entire problem could be fixed for just $1.5 billion, with benefits including not just faster shipping times and attendant economic development, but drastically reduced road traffic, energy use, and pollution.

My only criticism is that Longman could have done much more to drive home the point that the current problems of rail, such as a very hurtful lack of capacity, are largely the results of letting Wall Street do what it pleased the past three decades. It’s just that I personally believe that if we are going to save the economy, and our future, we need to absolute annihilate the idea that finance can be allowed to seek the highest return without regard to what is required to advance the general welfare. Still, Longman makes the point more than adequately:

Why don’t the railroads just build the new tracks, tunnels, switchyards, and other infrastructure they need? America’s major railroad companies are publicly traded companies answerable to often mindless, or predatory, financial Goliaths. While Wall Street was pouring the world’s savings into underwriting credit cards and sub-prime mortgages on overvalued tract houses, America’s railroads were pleading for the financing they needed to increase their capacity. And for the most part, the answer that came back from Wall Street was no, or worse. CSX, one of the nation’s largest railroads, spent much of last year trying to fight off two hedge funds intent on gaining enough control of the company to cut its spending on new track and equipment in order to maximize short-term profits.

So the industry, though gaining in market share and profitability after decades of decline, is starved for capital. While its return on investment improved to a respectable 8 percent by the beginning of this decade, its cost of capital outpaced it at around 10 percent—and that was before the credit crunch arrived. This is no small problem, since railroads are capital intensive, spending about five times more just to maintain remaining rail lines and equipment than the average U.S. manufacturing industry does on plant and equipment. Increased investment in railroad infrastructure would produce many public goods, including fewer fatalities from truck crashes, which kill some 5,000 Americans a year. But public goods do not impress Wall Street. Nor does the long-term potential for increased earnings that improved rail infrastructure would bring, except in the eyes of Warren Buffett—who is bullish on railroads—and a few other smart, patient investors.

Longman ends by noting that the financial collapse and economic crises have created new political opportunities.

Is all this politically feasible? Certainly more so than a year ago, before the consensus formed that we must invest massively in infrastructure of some kind. Importantly, too, we’re not talking about bailing out a failing industry, but about helping an expanding, more energy-efficient one to grow fast enough to meet pressing public needs. Nor would we be making big bets on unproven technology. Also, it’s important to remember that big trucking companies, facing acute driver shortages and mounting highway congestion, are increasingly shifting their containers to rail and so have an interest in improved rail infrastructure.

There is definitely a buzz building about rail, but we need to make it much, much bigger. In The New Republic, John B. Judis also highlights rail in his article, Not Doing Enough: Why I worry that Obama doesn't realize just how bad things are.

Remember the idea of the Shock Doctrine and disaster capitalism. Let’s not waste the political opening afforded by these financial and economic crises by being too timid in what we demand of the new Obama administration. Otherwise Wall Street and the disaster capitalists will win by default.
 

 

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It is a great idea reviving rail traffic on cost grounds, and moving freight off the roads. Useful article too. I used to know people interested in rail traffic here and in Europe quite a while ago now.

Here there are two issues the fans tend to overlook. The first has to do with the volume of the major kind of freight shipped. The second with the physics of rail freight. It is called staying on track while going round the bend.

The US ships the coal consumed in electric generating stations by rail primarily with some barge traffic. Coal companies and their freight are the biggest customers, by volume, of the remaining rail companies. The "clean coal" phase we went through a few years ago resulted in long line shipments from out of the Powder River Basin in Wyoming to offset "dirty" eastern and Illinois basin coal. The volume transported is increased by the loss incurred burning the stuff in the power plants (about 30%) and the further loss in distributing the power (30% of the power generated. So about half of the coal moved is just burnt off as waste heat or distribution loss. Amazing and extravagant stupidity. More, cleaner, coal won't solve the issue of these losses from moving the coal and moving the electric power.

The physics question involves what has to be done to tracks to get round bends. The inside curve is raised to offset the centrifugal tendency of the train going round the bend to come off the track. The higher the speeds at which traffic runs the higher the super-elevation of the inside curve needed to compensate. So the geometry of the track lay-out sets a limit on maximum safe speed. Running a billion tons plus of coal over the rail system for years in long slow moving trains does what you might expect. It flattens out the tracks. Thus coal trains tend to reduce all rail traffic to the speed of the coal train, unless specially dedicated tracks are provided for non-coal freight. This is not because of the speed of the trains using the system, but because thetrains eliminate super-elevation and destroy track. I think this kind of separation has happened with the double stack container traffic which moves Chinese and other Asian imports out of Long Beach. Without the incoming stimulus from China etc, it is doubtful there would be much need for more of that kind of freight.The same thing holds true for high speed passenger traffic.

Hi-speed rail pioneers, France, Japan and Germany got round this problem by building high speed track on new rights of way which permitted straight away sections to be maximized, and bendy bits minimized, though the French and other high speed systems obviously go through geographic areas where that isn't possible.

When it came to the "high speed" Acela on the US east coast route, the preference here was for tilt trains because tilty trains were so much cheaper than investing in redoing the right of way. This meant the cost efficiency possible with high speed rail was compromised completely before they even started construction, and a pathway to better, faster equipment and rolling stock excluded from future options without incurring the cost of redoing of the rail beds which had been rejected once before already.

So actually rail freight, and passenger traffic, could both benefit from developing an alternative to central electric generation from coal fired plants and the cross continental system of distributing losses together with power.

In the 1970's computer experts used to argue that memory would never be cheap enough to offset, or replace, the main frame computer. They were wrong: and instead of main-frame driven systems networked to dumb slave terminals, we got distributed networks, the internet and pc's with amazing cumulative savings in the cost of memory driven by that law about doubling and halving every eighteen months. Something similar needs to be done with electric power generation. There needs to be a move away from authoritarian top down control central generating systems to the kind of democratic, self determining, self shaping systems which have proven to be so effective in the computer world once the shibboleths about the cost of memory were disabused. The fuel cell seems to be the best candidate for this, as long as ways can be found to make them more efficent and less wasteful than the central system they would replace. Chremical not thermal processes reduce the losses through burning. Proximity to use reduces the 30% transmission loss to negligible. So such systems are starting with a built in cost advantage if anyone had the wit to see it. This is how we power parts of the space program, and have done for decades. The new approach would start in the home using the kind of fuel cell which Honda, for example is providing with its new model electric car, to power residential uses, and also address needs of hotels, hospitals, schools and offices. This will help to shift the power load away from the central generators, and also shift coal off the rail roads. Pretty soon both would have gone the way of IBM and the rest of the main frame monoliths.

Then, the rail roads might be able to offer the potential for high speed freight movement as well as high speed passenger traffic, because no one woukd have to worry about the damage moving coal does to the traffic network as whole. This might take a while to do, but so what, it would eliminate the fuel consumption use patterns which prevail in power generation and passenger traffic (auto and much inter-city air traffic) as the composition of power generation changes.

But of course the coal companies, power monopolies, oil companies, airlines and mortgage holders on the real property investments of all those, like insurance and pension funds, will not be happy at all to see their accumulated claims to income written down in the way that would follow. So I fear it will all be just a dream and a way for old timers romanicing the rails to let off a bit of steam. Last train to San Fernando, anyone? Or how about She'll be coming down the mountain when she comes...?

 

 

 

 

 

 

brought to mind Arlo Guthrie:

 

So true: "we need to absolute annihilate the idea that finance can be allowed to seek the highest return without regard to what is required to advance the general welfare." and noone's even talking about revising what are responsibilities of boards of directors.

With fiduciary responsibility to shareholder primacy job one and in an economy that services, or almost more literally, transacts, rather than manufactures, doesn't job one become the task of being at the skinny end of Ponzi's pyramid?

Our system's no longer designed for long-term capital investment into sustainably grown industry.  It's design is to take what more can be gotten by the next quarterly report.

You'd be irresponsible if you didn't take it all up front, it seems to me.  The plurarlity of 'corporate persons' are not going to argue with that principle, I'm certain!

 And that's what noone's talking about changing.

On another note, I'm hoping that John Spinelli will check in, he's working on a project to introduce manufacturing of systems for elevated tubular rail that seems appropriate to regional transport.  Whether it'd fit into the long-haul system for freight, I'm not informed enough to say.

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"I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country." - Thomas Jefferson

The people-mover project he is working on has been covered. He wrote about it in one of his last posts. There was then a communication from someone connected to the broad field of urban transportation who said that it was not the best technology on the block. I posted this and thenere was a reply from another person connected with the people-mover project and an answer. Quite an interesting discussion emerged I thought. I am a big "fan" of urban transportation but it does pay to scrutinize the different technology alternatives.

IMO Corporate personhood is dfinitely a swindle, full stop.

In one of his books Robert Reich pointed out that in the 'fifties large corporations were expected to support communities and contribute to society. It was part of the mythos then. Globalization put at end to such niceties, especially as regulatory controls were lifted or aborted by de-financing regulatory agencies. I think a lot can be done with tax incnetives. Rewarding long term investment etc. Just like tax incentives for green investment.

carol